$RR. (-0.72%) Source: The Shareholder
The shares of engine manufacturer and defense contractor Rolls-Royce have gained 75 percent this year. On Thursday, the company presented its half-year figures and raised its forecast, thus justifying investors' confidence. The promising Power Systems division also exceeded the forecast.
Adjusted operating profit climbed by 51 percent to 1.73 billion pounds (around 2 billion euros), clearly exceeding analysts' expectations of 1.24 billion pounds. Sales increased by eleven percent to 9.06 billion pounds. The Civil Aerospace division performed particularly well, with Rolls-Royce earning 1.19 billion pounds, almost twice as much as analysts had expected. The operating results of the Defense and Power Systems divisions also exceeded forecasts.
In addition to the operating strength, the cash flow was also convincing: the free cash inflow rose by 38 percent year-on-year to 1.6 billion pounds and exceeded the consensus estimate of 1.19 billion pounds.
As a result, the management raised its forecast. For the full year, Rolls-Royce expects an adjusted operating profit of 3.1 to 3.2 billion pounds, up from 2.7 to 2.9 billion pounds previously. Free cash flow is expected to rise to up to 3.1 billion pounds. Investors will also benefit: Rolls-Royce plans to pay a dividend of 4.5 pence.
In the second half of the year, the Group expects slightly weaker earnings momentum. Increased investments in maintenance and production, among other things, will put pressure on profits. Nevertheless, the interim results are optimistic. As are statements about the promising Power Systems division. Among other things, the Group manufactures small nuclear reactors, known as Small Modular Reactors. Demand is high and the division is expected to turn a profit in 2030.
